Ford's Debt Securities After The Virus Triggers A $2 Billion Loss

Ford's Debt Securities After The Virus Triggers A $2 Billion Loss


After recording one of its highest ever quarterly losses, Ford Motor Co. is taking its first drive through the high-yield market in years, aiming to boost liquidity. The automaker seeks to collect unsecured bonds in three pieces, with the longest maturity, a 10-year cover, marketed at a yield of around 11 percent, according to a individual knowledgeable about the matter.

It's the first debt deal the company has made since it lost its investment-grade ratings on March 25, becoming the biggest fallen angel of the new downgrade period.

Ford Motor Co. said Friday it will enter capital markets to shore up its cash reserves as the coronavirus epidemic pummeled car revenue and halted development, culminating in an expected first-quarter loss of about $2 billion.

The company based in Dearborn, Michigan, which lost its investment grade status in March, said it filed for a three-part unsecured debt offering, but did not disclose the number. 

Ford, which has taken more than $15 billion to mitigate the harm from the pandemic to his company, said he had to put up some assets as collateral for the loans because it does not retain a status of investment grade. This has suspended a quarterly dividend.

As of Dec. 31, the No.2 United States automaker had around $70 billion in assets and as of April 9, about $30 billion in cash on its balance sheet. 

Individually, Ford indicated that its production of high-priced models of Pickup trucks and sports utility vehicles could be affected due to the damage caused earlier this week by a tornado at South Carolina parts manufacturer of BorgWarner.  

BorgWarner's facility makes Ford vehicles pass case. During the first quarter, Ford's car deliveries to dealers fell 21 per cent compared to a year ago. 

Instead of the COVID-19 outbreak the company shuttered plants in North America and Europe in March.

Photo: The front grill logo of a Ford pickup truck.